Restrictions on Marketing Practices Regarding Student Credit Cards
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by: barrywaters
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Word Count: 452
When students begin their studies at a university, they are quickly greeted by give away and rewards if they apply for student credit cards. Representatives trying to convince kids to apply for student credit cards have become more prevalent over the years. Students are an easy target. Most of them are discovering a new sense of autonomy, as they take charge of their daily lives. For some, student credit cards offer the promise of instant gratification and new spending power. Many state legislatures and college administrators, however, feel that credit card companies are taking advantage of students at a time when many are very naive about financial obligations and do not yet understand the long term consequences of debt. Rutgers University banned companies from marketing student credit cards on its campus several years ago. Some universities are considering less drastic measures to reign in behaviors that push student credit cards, as state lawmakers discuss ways to help them do that. California, Oklahoma, New York and Texas are among the states that have passed laws that rein in marketing and solicitations of student credit cards, and Illinois is currently debating similar restrictions. The first week of February, New Jersey joined the list of states trying to crack down on predatory solicitations of student credit cards on campuses. A bill was introduced that requires companies to provide educational programs for students prior to any student credit cards being issued. The programs must provide an understanding of how debt affects credit, how interest on balances is calculated, the different interest rate terms and the consequences of not paying balances in full each month. The law will target incentives and give aways, as well. New Jersey legislators, like those of the states that preceded them, are hoping to prevent bad credit habits in the students on their campuses. Credit cards can be a useful financial tool, if used appropriately, and legislators want to give students a chance to make sound decisions about those cards.
The country is coming to terms with the economic downturn and consumers are restructuring their financial goals. The years of a booming real estate market and economy left some feeling they could spend freely without consequence. As a result, some are now reworking their budgets and striving to eliminate credit card debt. The efforts of many state legislatures and university administrations to tame the marketing of student credit cards aim to prevent students from falling into the trap that so many consumers have fallen into. If students learn to make sound decisions regarding their finances and spending habits in college, they will carry that with them into adulthood.
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